STATUS CERTIFICATE (Source: Stephen Shub)
Previously it was called an estoppel certificate. The new STATUS CERTIFICATE can be ordered by anyone (realtors, appraisers, a person walking by the building) so long as a written request is made together with the fee (maximum of $100.00, including taxes). From the time the request is made in writing and the fee is paid, management has up to 10 days to make the STATUS CERTIFICATE available with all the usual accompanying documents (including declaration, by-laws, budget, financial statements, rules, insurance certificate). One of the new statements in the Status Certificate obligates management to report the number of units in the complex that management is aware are leased units (as opposed to owner occupied units) which might be a factor for consideration for some buyers.
For a buyer to rely on the contents of the STATUS CERTIFICATE, it is no longer a requirement that the certificate be ordered by (or in the name of) the purchaser. Any Purchaser or mortgage lender is entitled to rely on whatever the STATUS CERTIFICATE discloses as of the date the Certificate was issued.
The STATUS CERTIFICATE must now disclose much more information about reserve fund, existing circumstances that might require a future increase in common expenses (or special assessment), possible litigation, etc. The Certificate must list the types of agreements (including management agreement) to which the condominium corporation is a party and a statement that the person requesting a status certificate has the right to obtain copies of such agreements upon paying an additional fee for labour and copying charges.
RECOMMENDATION: It is highly recommended that when vendors list a condo for sale, the vendor should order a status certificate since almost any incoming offer will be conditional on a status certificate review. Vendors and listing agents should make themselves aware of what prospective buyers will see in the status certificate and seek any needed clarification about any issues with the property manager before (if possible) receiving an offer. Knowing, and understanding the product being sold is important! Also, by ordering the status certificate at the time of listing, a vendor can save 10 days upon receiving an offer (to obtain the status certificate later with uncertainty and lost time) while the clock is ticking for a status certificate condition in a purchaser's offer.
The buyer's new condition clause should be one that requires the vendor to pay for the status certificate since the vendor can more quickly order and obtain the status certificate due to the vendor's easy access to management (although anyone can order it); also, the purchaser's lawyer might need to order a new status certificate as an update before closing (if the closing date is more than 60 days into the future) which means that the vendor pays for the certificate during the condition period and the purchaser pays for any update needed before closing by the purchaser's lawyer (depending on how far into the future the closing date is). Reserve Fund Study - Previously there was no requirement in the old Act for reserve fund studies which were generated by management companies who recommended them be done, as prudent managers. The main requirement in the old act to fund reserves was that a minimum of 10% of monthly common expenses paid must be deposited into a reserve account for future major capital expenditures (eventual replacement of roof, windows, major repair items, etc.).
Under the new Condominium Act, existing registered condominium corporations must prepare a reserve fund study within three years of May 5, 2001. Until such a study is done, the condo corporation must still deposit at least 10% of the monthly common expenses into the reserve fund. The study evaluates the remaining life expectancy of each building component over a projected 30 year period, considers the projected replacement cost of each building component and a financial plan to fund such replacement through the projected reserve fund with recommendations for what amount the monthly deposit should be into reserve (whether it be 10%, more, or less, depending on the current balance in the reserve fund, the existing state of repair of the project, etc.). Reserve fund studies must be updated in intervals of not more than 3 years from the last study.
The Condominium Board of Directors must propose a plan for funding the reserve fund within 120 days of receiving a reserve fund study. Notice of the funding plan must be sent to unit owners within 15 days of the proposal by the Board of Directors who have 30 days from sending the notice to begin its implementation. WITHIN 10 years of the first reserve fund study done between May 5, 2001 and May 5, 2004, the funding plan must achieve an adequate level of the reserve fund to satisfy the requirements proposed by the reserve fund study. Once a level of adequacy is achieved for the reserve fund, future reserve fund study updates must ensure that any inadequacy of the reserve fund is remedied within the next fiscal year following the fiscal year in which the study, or update, was completed.
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Q: What is a
Status Certificate, and why do I need one to refinance or sell my home?
A: Status Certificate is a legally binding document which
outlines not only the
account status of a Condominium Unit, but also the financial and
legal position of the Corporation as a whole.
This important document allows a potential investor to make an
educated
decision about what they are buying. The Certificate helps
identify potential liabilities and determine the financial stability of a
Condominium
Corporation. It also provides the requestor with important
documentation
such as: proof of Insurance for the Corporation; a copy of the
current budget; a copy of the most recent Audited Financial Statement; a copy of
the Form 15
– Notice of Future Funding of the Reserve Fund for the most
recent Reserve Fund Study; and a copy of the Declaration, By-Laws and Rules and Regulations for the Corporation. All of these attachments are
valuable for a person who is researching to invest in a new home.
For further detail about the content of a Status Certificate,
you may reference Section 76 of the Condominium Act 1998. An unofficial version of
the Condominium Act 1998 can be found on the “links” page of our
website
Q: How do I go about getting a Status Certificate for my Unit?
A.The Condominium Act 1998 states that “the Corporation shall
give the Status
Certificate within 10 days after receiving a request for it and
payment of the fee
charged by the Corporation for it.”
Any requests for a Status Certificate must be in writing, and
accompanied by a payment of $100.00. Once this request is
received at our head office, the 10 day allowance for preparing the certificate begins. Although our
typical turnaround is usually less than one week, a person should request the Status
Certificate 10 days before it is required. You will be contacted by Management as
soon as the
certificate is ready for you to pick it up.
Q: Can my Status Certificate be updated before closing?
A. The information provided on a Status Certificate is current
only on the day of issue, and the information will not be updated verbally under any
circumstances. We therefore recommend that a second Status Certificate is ordered
within the month that your sale is scheduled to close, so that updated information can
be obtained. The purpose of the Status Certificate at this time is to protect
both the vendor and the purchaser by disclosing up to the minute information about the
status of the unit, and
the position of the Condominium. The closer that the status
certificate is issued to the closing date, the more protection it will afford the purchaser.
Although the requirement to purchase a Status Certificate at the time of
closing is not required by the Condominium Act 1998, it is prudent.
Q: What do I do once I’ve sold my Unit?
A. As the vendor of a property, you must ensure that all monies
due to the
Corporation are paid at the time of closing (this may be done in
trust through your lawyer), and that any future payments to the Corporation
are cancelled.
Requesting a Status Certificate does not confirm that a Unit has
been sold and
does not automatically cancel your payments to the Corporation.
It is important
that you make contact with Management to cancel your payments 5
days in advance for post-dated cheques, and 10 days in advance for
pre-authorized
payments. You should note that in order to cancel the P.A.P., a
written request
must be submitted.
For a short while after you have sold your Unit, you may still
receive letters
from Management requesting payment on the common expenses.
Unfortunately, even though Management may suspect that you have
sold your Unit, we are unable to make changes to the corporate register
until notice is
received in writing from the purchaser or their agent. From time
to time there is
a delay in receiving this notice and as a result, the account
will remain under
your (the vendor’s) name. Should you receive any notices from
Management
with regards to the maintenance fees for a Unit you have already
sold, you should contact your lawyer to make sure the required notice has
been sent.
Q: What should I do once I’ve purchased a Unit?
A: As the purchaser of a Condominium Unit, you need to be aware
of your
obligations to the Corporation. As each and every Condominium
Corporation
is different, you should review the Declaration, By-Laws and
Rules &
Regulations attached to the Status Certificate, a copy of which
should have been provided to you by your lawyer.
First and foremost, you need to ensure that a written notice is
sent to
Management as soon as the sale closes to advise the Corporation
of your
interest in the property. This may be done by you or your agent.
Until such
notice is received, we are unable to provide you with any
information about the Unit as these records are confidential. As soon as the
above-mentioned
change of ownership is received, Management will send out a
welcome package to you outlining your payment options and other
important details
about your Condominium.
Your obligation to contribute to the common expenses begins
immediately
after you purchase your Unit. Remember that your maintenance
fees may be the only source of revenue for your Corporation, so you will
want to make payment arrangements immediately. |
